The agency cost of political connections: Evidence from China's File 18

Hu, Yi; Wang, Chang‐Yun; Xiao, Gang; Zeng, Jianyu

doi:10.1016/j.pacfin.2020.101426

Cited by 15 publications

(7 citation statements)

References 44 publications

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“…Prior research on firms’ political connections shows less reliance on internal cash flows for investment (Ganguly et al, 2023a; Xu et al, 2013), as firms have access to low-cost loans from banks (Boubakri et al, 2012b; Houston et al, 2014; Khwaja & Mian, 2005), resulting in higher leverage in their books (Bliss & Gul, 2012b). As a result, politically connected firms have more cash on their books (Boubakri et al, 2013; Ganguly et al, 2023b), increasing the risk of agency conflicts (Hu et al, 2020). However, regulatory changes (bankruptcy reforms) ensure the protection and rights of creditors, preventing firms from holding large amounts of cash in their books (Jadiyappa & Shrivastav, 2022).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India

Ganguly,

Mishra

2023

Journal of Emerging Market Finance

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Using a sample of 1,953 listed firms on the National Stock Exchange from 2009 to 2021, we investigate whether politically connected firms alter their cash holding patterns following the Insolvency and Bankruptcy Code (IBC) reforms introduced in 2016. We also examine the impact of changes in a firm’s cash holdings on its performance. Results show that politically connected firms reduced their cash holdings following the implementation of IBC in 2016, as new reforms better protected creditors through strict enforcement rights. We also find that politically connected firms with large amounts of cash perform poorly in the post-IBC period compared to their nonconnected peers. The results are robust after excluding the COVID-19 period and controlling for firm size, leverage, and business group affiliations. JEL Codes: G32; G34; G38

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India

Ganguly,

Mishra

2023

Journal of Emerging Market Finance

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“…Perusahaan membangun koneksi politik dengan maksud mencari kebijakan khusus dari pemerintah yang menguntungkan dirinya, hal ini terjadi baik di negara berkembang maupun di negara maju (Hu et al, 2020). Walaupun demikian, menurut Chaney et al (2011), kualitas penerimaan perusahaan tersebut lebih buruk dari pada perusahaan yang tidak mempunyai koneksi.…”

Section: Hasil Penelitian Dan Pembahasan 31 Hasil Dan Pembahasan Pene...unclassified

Pengaruh Female Tainted Director Terhadap Biaya Audit dan Kualitas Laporan Keuangan dengan Variabel Moderasi Political Connection

Kramadibrata

Aulia

Kamsurya

2021

JISIP

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Penelitian ini bertujuan untuk menguji pengaruh Female Tainted Directorsdan political connection (koneksi politik) terhadap kualitas laporan keuangan serta biaya audit. Selain itu penulis juga mencoba menguji variabel political connection sebagai variabel moderasi Female Tainted Directorsterhadap kualitas laporan keuangan dan biaya audit. Variabel Female Tainted Directorsdidefinisikan sebagai direktur perempuan yang pernah menjabat sebagai direktur pada perusahaan sebelumnya dan terlibat masalah kegagalan keuangan serta integritas. Sedangkan untuk variabel kualitas laporan keuangan, didefinisikan dengan manajemen laba yang dilakukan oleh perusahaan. Variabel koneksi politik didefinisikan dengan adanya hubungan politik direktur utama atau direktur utama yang berkecimpung dalam dunia politik. Sedangkan untuk variabel biaya audit di definisikan sebagai biaya yang dikeluarkan manajemen untuk dilakukannya audit eksternal dengan berdasarkan pertimbangan-pertimbangan tertentu. Variabel Female Tainted Directors, Kualitas Laporan Keuangan, dan Koneksi Politik dianggap memiliki pengaruh tehadap besarnya biaya audit yang akan dikeluarkan oleh perusahaan. Penelitian ini akan menggunakan sampel observasi perusahaan keuangan di Indonesia selama periode tahun 2012-2020 dengan menggunakan regresi panel.Penelitian ini bertujuan untuk menguji pengaruh Female Tainted Directorsdan political connection (koneksi politik) terhadap kualitas laporan keuangan serta biaya audit. Selain itu penulis juga mencoba menguji variabel political connection sebagai variabel moderasi Female Tainted Directorsterhadap kualitas laporan keuangan dan biaya audit. Variabel Female Tainted Directorsdidefinisikan sebagai direktur perempuan yang pernah menjabat sebagai direktur pada perusahaan sebelumnya dan terlibat masalah kegagalan keuangan serta integritas. Sedangkan untuk variabel kualitas laporan keuangan, didefinisikan dengan manajemen laba yang dilakukan oleh perusahaan. Variabel koneksi politik didefinisikan dengan adanya hubungan politik direktur utama atau direktur utama yang berkecimpung dalam dunia politik. Sedangkan untuk variabel biaya audit di definisikan sebagai biaya yang dikeluarkan manajemen untuk dilakukannya audit eksternal dengan berdasarkan pertimbangan-pertimbangan tertentu. Variabel Female Tainted Directors, Kualitas Laporan Keuangan, dan Koneksi Politik dianggap memiliki pengaruh tehadap besarnya biaya audit yang akan dikeluarkan oleh perusahaan. Penelitian ini akan menggunakan sampel observasi perusahaan keuangan di Indonesia selama periode tahun 2012-2020 dengan menggunakan regresi panel.

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“…Control governance performance. The other side believes that political connections increase the ability and motivation of major shareholders to misappropriate funds [17], thereby increasing agency costs. To a certain extent, this will increase the risk of adverse selection by management and weaken corporate governance elements such as internal control.…”

Section: Introductionmentioning

confidence: 99%

Political connections and corporate ESG performance

Hu,

Cheng,

2024

Sustain. Econ.

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With the popularization of the concept of sustainable development, corporate ESG performance has attracted more and more attention from all walks of life. However, there is still a lack of in-depth discussion on what factors affect corporate ESG performance, especially in a political and economic system like China. This article takes A-share listed companies as a sample to empirically analyze the impact of political connections on corporate ESG performance. The study found that political connections can promote corporate ESG performance by increasing media attention and reducing financing constraints. Further research found that this promotion performance is more significant in non-state-owned enterprises. This article combines the national conditions with Chinese characteristics, enriches the research on the factors that promote corporate ESG performance from the government perspective, and deepens the research on the role and consequences of political connections.

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The agency cost of political connections: Evidence from China's File 18

Cited by 15 publications

References 44 publications

Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India

Does Bankruptcy Reforms Enhance Firm Performances for Politically Connected Firms? Evidence from India

Pengaruh Female Tainted Director Terhadap Biaya Audit dan Kualitas Laporan Keuangan dengan Variabel Moderasi Political Connection

Political connections and corporate ESG performance

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